Twitter has bought London-based AI startup Magic Pony Technology for a reported $150m (£102m) as the company moves to strengthen its position in image-sharing, video and live video.

Founded in 2014, Magic Pony uses machine learning to build improved systems for visual processing. The company said it was excited to be joining forces with Twitter “to improve the visual experiences that are delivered across their apps”.

Dorsey said the team included “11 PhDs with expertise across computer vision, machine learning, high-performance computing and computational neuroscience”.

By teaching a neural network what certain types of images are like, Magic Pony’s systems can restore lost information to blurry pictures, or create new visuals from scratch.

In demonstrations of its technology in April, Magic Pony showed one system that could “restore” a realistic face from the pixelated visage of the main character of Doom, and another that could automatically generate a brick-and-plaster wall from a small image.

Many of the company’s advantages over competitors come from its speed and efficiency. While big companies such as Google and Adobe have image-processing technology that can pull off many of the same feats, Magic Pony says it targets “desktop, mobile and web”, and has demonstrated some of its systems running on video, live.

Twitter could build the technology into its app to improve the quality of streamed video or use it as a form of ersatz image compression. Magic Pony’s cofounder, Rob Bishop, told MIT Technology Review in April that “online video-streaming businesses rely heavily on video compression. Our first product demonstrates that image quality can be greatly enhanced using deep learning, and fast mobile GPUs now allow us to deploy it anywhere.”

Bishop was the first engineering employee at Raspberry Pi. He and his cofounder, Zehan Wang, met at London-based startup accelerator Entrepreneur First.

Magic Pony’s investors highlighted the acquisition as further evidence of the UK’s lead in AI. “The UK continues to grow as the ‘go-to’ place for companies looking to build best in breed AI technology,” said Luke Hakes of Octopus Ventures. Suranga Chandratillake of Balderton Capital added: “We are delighted that an iconic west coast company has once again recognised that Europe is right at the forefront of the AI revolution.”